2005 (2) TMI 576 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Appeal passed by Commissioner (Appeals) for refund claim.
2. Contention regarding liability to pay interest on confirmed demand.
3. Applicability of Section 11AB for interest chargeability.
4. Dispute over interest for the period August '97 to 9-11-1997.
5. Interpretation of Section 11BB for interest payment timeline.

Analysis:
1. The appellant filed a refund claim after a final order by the Tribunal confirmed a demand for a specific period and set aside the demand for the remaining period. The appellant deposited Rs. 5 lakhs as pre-deposit and claimed a refund, which was partially sanctioned after deducting duty and interest amounts. The Commissioner (Appeals) set aside the interest charge and ruled the respondents were entitled to interest from the Tribunal's final order date.

2. The Revenue contended that interest was payable as the respondents were notified about it in the show-cause notice, and the Tribunal's final order did not exempt them from paying interest on the confirmed demand. The Revenue argued that interest deduction from the refund claim should start from the Tribunal's order date, contrary to the contention that interest should be paid after three months as per Section 11BB.

3. The respondents argued that interest was not chargeable on the confirmed demand as there were no allegations of misdeclaration or suppression, which are conditions for applying Section 11AB. The dispute primarily revolved around the interest for the period August '97 to 9-11-1997, which was confirmed in the demand.

4. The Tribunal found merit in the Revenue's argument that the appellants were liable to pay interest on the confirmed demand based on the earlier order. The Tribunal clarified that interest payment should commence after three months from the Tribunal's final order date, in line with Section 11BB, rejecting the Commissioner (Appeals)' unsustainable ruling on interest refund timeline.

5. The impugned order was modified to align with the statutory provision of Section 11BB, ensuring interest payment after three months from the Tribunal's final order. The appeal was disposed of, considering the adjustments made to the refund amount and subsequent refund of Rs. 50,185 to the respondent.